A STUDY ON THE IMPACT OF FDI INFLOWS ON EXPORTS AND GROWTH OF AN ECONOMY: EVIDENCE FROM THE CONTEXT OF INDIAN ECONOMY
Keywords:
FDI, Exports, GDP, correlationAbstract
It needs little emphasis that a nation’s international competitiveness today crucially depends upon the growth and technological dynamism that it adopts. Economic policymakers, therefore, go out their way to attract Foreign Direct Investments (FDI), as a high level of FDI is viewed as a catalyst of economic growth for the host country. This paper thus examines the two most important benefits associated with the inflow of FDI for the host country in the form of: Export Promotion and GDP Growth.
To study the dynamics of co-integration between FDI, GDP and Exports, evidence is taken from country-specific level like Indian Economy where the period of study is from 2000-2012. As FDI inflow can have a two-way impact on the host country, hence, the paper firstly examines the current economic scenario of India in terms of its FDI inflows, GDP growth rate and its export performance so far. Secondly, the paper shows a positive correlation between FDI, GDP and Exports by framing Simple Regression and Multiple Regression Models built on the hypotheses formulated and validating the results of the models based on ANOVA and Durbin-Watson test.
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